The Schiehallion Fund

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<p><strong>Your capital is at risk. Past performance is not a guide to future returns.</strong></p> <p>&nbsp;</p> <p><strong>Lucie Majstrova</strong>: The end of this quarter marked the Fund’s seventh anniversary. In 2019, Schiehallion was launched as our first dedicated private growth portfolio, and it aimed to solve a problem. It was a problem for our institutional clients that companies were staying private for longer, leaving a gap in their portfolios. And rumour has it that we actually picked a name for the Fund that would help to keep it under the radar.</p> <p>But with the fund and the portfolio maturing, the Fund became ready for a wider audience. So first it was the UK wealth managers that started adding it to their clients’ portfolios. And then last year, our shareholders approved changes necessary to make it available to retail investors as well. The fund also became eligible to be a part of an index. On the 23rd of March, it joined the FTSE 250.</p> <p>And this is all happening alongside continued strong performance momentum. The Net Asset Value was up about 10 percent and share price around 27 percent in the first quarter of the year. The fund is now trading at a premium for the first time since 2022. But what lies behind the continued strong performance?</p> <p>Well, now the portfolio has had sufficient time for the winners to pull ahead and show the power of return asymmetry that is so inherent to growth investing. So, performance now is really being driven by these winners. And SpaceX was the first investment in the fund and has been one of the more successful ones for shareholders.</p> <p>It is still one of the largest positions in the Fund. It’s the company’s vertically integrated business model that allowed it to compress the cost of launch to levels that competitors could not match, and then this lower cost of launch made entirely new business lines possible. So when we first invested, Starlink was still in its infancy, but today it is such a strong contributor to the company’s bottom line.</p> <p>But what is next? At the start of the quarter, the company announced its plan to combine with xAI. We are now all witnessing the enormous potential of AI. However, the training and running of these models is notoriously power hungry and this is constraining growth. But if datacentres could be placed in space, they could benefit from solar energy without the constraints of the Earth’s atmosphere and the day and night cycles.</p> <p>This is not viable at the current cost, but the deployment of Starship promises to further lower costs of launch, so this will change what we can economically do in space and further expand the opportunity set for the company. While we are on the topic of AI, Anthropic completed a financing round, valuing the company at $350 billion. So this is more than double entry valuation from last summer.</p> <p>The increased price is underpinned by the company’s blistering pace of revenue growth, and it is really their focus on enterprise customers that has been paying off. The companies monthly revenue is roughly four times compared to when we first invested in August last year. An incredible pace of growth and much closer to home Revolut gained a full banking license and reported profit of £1.7 billion.</p> <p>The neobank now has more customers worldwide than the global giant HSBC, and it has grown to this scale without becoming most users’ main bank account or offering loans. So if last year was a year of maturation, what is coming next? 2026 looks set to see notable initial public offerings, or IPOs. Two popular companies, SpaceX and Zetwerk have already filed for an IPO this year.</p> <p>Zetwerk is manufacturing platform based in India, and what they do is they work with industrial companies, taking away the complexity of working with a large number of suppliers. They assigned all this to their network of vetted factories, and they are responsible for monitoring quality and giving their clients clarity on the progress of their order. But I think the crucial question is what will this IPO mean for the portfolio?</p> <p>But actually, for us, this is a part of business-as-usual. What we do is that we aim to invest in exceptional private growth companies. They will typically have the ambition to go public and then when they succeed, ultimately, a time comes when we use these proceeds to reinvest into new future leaders. Today, the fund has actually already seen 11 IPOs, and we have also used secondary markets to trim and sell positions.</p> <p>So, in this way, we have reinvested $300 million back into the portfolio since 2019. And we are so excited about the companies in our pipeline and the quality of their business models. I really recommend reading an article that Peter Singlehurst, manager of Schiehallion, wrote on the outlook for private growth and the prospect of mega IPOs.</p> <p>It is titled ‘Tomorrow’s Marvels Today’, and you can find it on the Insights section of our website. We’ll also be holding a webinar with Peter to discuss the annual results and the portfolio on the 11th of May. So do keep an eye out for the invite and get your questions ready.</p> <p>&nbsp;</p> <h3 class="TABLEHEADER1212pt">The Schiehallion Fund Limited</h3> <p><strong>Annual past performance to 31 March each year (%)</strong></p> <table border="1" style="border-collapse: collapse; width: 100%; border-width: 0px; height: 74.6668px;"> <tbody> <tr style="height: 18.6667px;"> <td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.6667px;">&nbsp;</td> <td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.6667px; text-align: right;"><strong>2022</strong></td> <td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.6667px; text-align: right;"><strong>2023</strong></td> <td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.6667px; text-align: right;"><strong>2024</strong></td> <td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.6667px; text-align: right;"><strong>2025</strong></td> <td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.6667px; text-align: right;"><strong>2026</strong></td> </tr> <tr style="height: 18.6667px;"> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px;">Share Price</td> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">2.2</td> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">-63.0</td> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">19.1</td> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">13.6</td> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">95.7</td> </tr> <tr style="height: 18.6667px;"> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px;">Net Asset Value</td> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">0.3</td> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">-25.0</td> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">6.9</td> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">8.9</td> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6667px; text-align: right;">34.5</td> </tr> </tbody> </table> <p><span class="superscript">Source: Morningstar. Total return in US dollars.</span></p> <h3>Important information</h3> <p>This communication was produced and approved in April 2026 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.&nbsp;&nbsp;</p> <p>Unlisted investments such as private companies may be more difficult to buy or sell, so changes in their prices may be greater.</p> <p>This communication should not be considered as advice or a recommendation to buy, sell or hold a particular investment. This communication contains information on investments which does not constitute independent investment research. Accordingly, it is not subject to the protections afforded to independent research and Baillie Gifford and its staff may have dealt in the investments concerned.</p> <p>Baillie Gifford &amp; Co and Baillie Gifford &amp; Co Limited are authorised and regulated by the Financial Conduct Authority (FCA). 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